How do you know when you are ready to be a homeowner? There is a lot more to this question that you might thing. For instance, the true cost of home ownership will be much more than your mortgage payments. If you want to shop for your own house, please take the time to figure out how much it willreally cost you in the long run. Then you can make an informed decision.
You will probably need a large down payment. Most of those 0 money down schemes are gone. These days, a twenty percent down payment is back in fashion. Do you have this money? And after you put down this large amount, will you have any savings left? I think we have all learned that it does not do to be house poor in this day and age.
How long do you plain to stay? In my experience, people do better when they can live in their home for several years. If your expect a transfer or job change in the next few years, you should probably consider the advantages of renting. It will be much eaiser and cheaper to leave a lease than a home you own!
Lots of ads promote the advantages of purchasing your own home by comparing rent vs. mortgage payments. I think these really attract people, but those people are a little naive. Even if loan payments are $100 cheaper than rent, that will not cover insurance, property taxes, upkeep, and repairs. You have to realize how many bills that home owners have to pay before you know if this is a good time for you to buy.
Beyond mortgage and taxes, you will have other expenses. When your roof leaks or your dishwasher fails you will not have a landlord to call. Instead you must call a repair company. Do you have cash set aside for emergency repairs?
Also consider homeowners association fees. In some neighborhoods, these are moderate, but in some neighborhoods they can cost hundreds or thousands of dollars every year. And things can get reallly ugly when these are not paid.
You will also need to purchase a policy to protect your home. Costs vary, but expect to pay anything from several hundred to a few thousand dollars a year. You could argue that you had renters insurance when you rented, but this is usually much cheaper. Homeowners insurance covers your building, property, contents, etc. Renters insurance only covers property.
Now many realtors will cite the tax benefits of property taxes and mortgage interest. But you can only take advantage of this if yours are higher than the standard deduction that everybody gets to take.
I understand the advantages of home ownership. But I also understand that the decision to buy your own house should not be made lightly. Make sure you really figure out how much it will cost you to own before you buy.
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